Canadian Stocks Retreat a Fifth Day as Crude Oil Futures Drop

By Matt Walcoff -
Jun 6, 2011

Canadian stocks declined for a fifth
day, erasing their 2011 gain, as energy stocks fell on lower
crude-oil prices and financial companies dropped after the
country reported a 21 percent plunge in building permits.

Suncor Energy Inc. (SU), Canada’s largest oil and gas producer,
lost 2.2 percent as crude dropped. Bank of Nova Scotia (BNS), the
country’s third-biggest lender by assets, slipped 1.2 percent
after Statistics Canada said building permits sank the most in
five years in April. Sino-Forest Corp., the forestry company
accused of manipulating financial data by a short seller, gained
16 percent after tumbling 71 percent in the previous two
sessions.

“There’s no doubt the economic news lately not only in the
U.S. but in many other parts of the world has not been so
good,” said Stephen Gauthier, a money manager at Fin-XO
Securities in Montreal, which oversees about C$600 million ($613
million). “Everybody’s a little bit nervous about what we’ll
see in the next six months.”

The S&P/TSX fell 2 percent last week, trimming its 2011
gain to 0.6 percent, as the U.S. unemployment rate climbed to
the highest since December. The U.S. accounted for 75 percent of
Canadian exports last year, according to Statistics Canada. The
index’s five-day slide is the longest since Jan. 10.

Trading of put options to sell the iShares MSCI Canada
Index Fund climbed to a four-month high of 1,550 contracts
today, 14 times the four-week average.

Crude futures declined 1.2 percent to a two-week low in New
York as traders speculated slower economic growth will limit
demand.

Oilfield-services company Trinidad Drilling Ltd. (TDG) decreased
8.5 percent to C$8.74. Shares of the Calgary-based company have
sunk 20 percent since May 31, when it reported first-quarter
earnings that missed the average analyst estimate.

The S&P/TSX Financials Index slumped to a four-month low
after building permits fell more than all 13 economists in a
Bloomberg survey had forecast. Scotiabank dropped 1.2 percent to
C$57.77. Toronto-Dominion Bank, Canada’s second-largest lender
by assets, lost 1.8 percent to C$80.21. Manulife Financial
Corp. (MFC), North America’s fourth-largest insurer, declined 1.7
percent to C$16.16.

Sino-Forest Gains

Sino-Forest, which operates in China, rose 16 percent, the
most since 2008, to C$6.10 in Toronto Stock Exchange trading
after publishing documents on its website that it says support
its reported land ownership. On June 5, Carson Block, the
founder of Hong Kong-based Muddy Waters Research, said the
company’s disclosures of timber holdings do not match city
records.

Sino-Forest shares remain down 66 percent since June 1.

Companies with operations in Peru retreated after Ollanta Humala claimed victory in the country’s presidential election.
Humala has called for greater state control over natural
resources.

Teck Resources Ltd. (TCK/B), which owns an interest in a copper and
zinc mine in Peru, fell 3.6 percent to C$47.71. Teck, Canada’s
largest base-metals and coal producer, extended its losses after
Claudia Onetto, a company spokeswoman, said heavy rains have
forced the closure of a copper mine in Chile.